ADDvantage Technologies Announces Results for Fiscal 2011 Second Quarter

Second Quarter 2011 Total Revenue of $8.9 Million and Net Income of $0.06 per Diluted Share

Marketwired

BROKEN ARROW, OK--(Marketwire - 05/10/11) - ADDvantage Technologies Group, Inc. (NASDAQ:AEY - News) today announced its results for the three and six month periods ended March 31, 2011.Revenue for the three month period ended March 31, 2011 was $8.9 million compared to $12.1 million in the same period a year ago. Sales of new equipment were $6.4 million for the three months ended March 31, 2011 as compared to $7.8 million for the three months ended March 31, 2010. Net refurbished equipment sales were $1.3 million for the three months ended March 31, 2011 as compared to $2.9 million for the same period last year. The decrease in refurbished equipment sales was primarily due to a decrease in sales of digital converter boxes of $1.0 million. Service revenue was $1.2 million for the three months ended March 31, 2011 as compared to $1.4 million for the same period last year. This decline was primarily attributable to the closure of the Tulsat-West facility in the fiscal first quarter of 2011.Net income attributable to common shareholders in the second quarter of fiscal 2011 was $0.6 million, or $0.06 per diluted share, as compared to $1.1 million, or $0.11 per diluted share, in the same period last year.For the six months ended March 31, 2011, revenue decreased to $18.1 million from $22.3 million, for the same period last year.Net income attributable to common stockholders for the six month period was $1.3 million, or $0.13 per diluted share, as compared to $1.9 million, or $0.19 per diluted share, for the first six months of fiscal 2010.Ken Chymiak, President and CEO, commented, "During the second quarter of fiscal 2011, we maintained gross margins of approximately 30% and positive net income of approximately $0.6 million, while total revenue declined due to a number of external market factors continuing to affect the cable industry. Specifically, the cable television industry is experiencing a prolonged period of limited capital expenditures by MSOs on plant expansion projects and bandwidth upgrades in order to further conserve cash. We believe that returning equipment sales to pre-recession levels will be difficult to achieve until these plant expansions and bandwidth upgrades occur at the larger MSOs. Also, over the next several quarters we will continue to assess the full impact that Tulsat's new reseller contract with Cisco will have on our business."The positive cash flow we are generating in our business has allowed us to build our cash position to $10.2 million at March 31, 2011, up from $3.5 million at March 31, 2010. We anticipate our cash position to continue to increase as a result of our profitable operations and from our continued reduction in the level of inventory. While our inventory will be reduced, we plan on maintaining the inventory on-hand, or available to us via our supply channels, to meet our customers' demands once they increase their capital expenditures. As a result of the strong cash position we have established, we are regularly evaluating strategic ways to leverage our cash reserves in order to support the growth of our business and increase shareholder value," concluded Mr. Chymiak.Earnings Conference CallAs previously announced, the Company's earnings conference call is scheduled for 12:00 p.m. Eastern Time on Tuesday, May 10, 2011. The conference call will be available via webcast and can be accessed through the Investor Relations section of ADDvantage's website, www.addvantagetech.com. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the Internet broadcast. The dial-in number for the conference call is (888) 427-9421 or (719) 325-2196 for international participants. All dial-in participants must use the following code to access the call: 9022792. Please call at least five minutes before the scheduled start time.For interested individuals unable to join the conference call, a replay of the call will be available through May 24, 2011 at (877) 870-5176 (domestic) or (858) 384-5517 (international). Participants must use the following code to access the replay of the call: 9022792. The online archive of the webcast will be available on the Company's website for 30 days following the call.About ADDvantage Technologies Group, Inc.
ADDvantage Technologies Group, Inc. supplies the cable television (CATV) industry with a comprehensive line of new and used system-critical network equipment and hardware from leading manufacturers, including Cisco, Motorola and Fujitsu Frontech North America, as well as operating a national network of technical repair centers. The equipment and hardware ADDvantage distributes is used to acquire, distribute, and protect the broad range of communications signals carried on fiber optic, coaxial cable and wireless distribution systems, including television programming, high-speed data (Internet) and telephony.ADDvantage operates through its subsidiaries, Tulsat, Tulsat-Atlanta, Tulsat-Nebraska, Tulsat-Texas, NCS Industries, ComTech Services and Broadband Remarketing International. For more information, please visit the corporate web site at www.addvantagetech.com.The information in this announcement may include forward-looking statements. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements. These statements are subject to risks and uncertainties, which could cause actual results and developments to differ materially from these statements. A complete discussion of these risks and uncertainties is contained in the Company's reports and documents filed from time to time with the Securities and Exchange Commission.(Tables follow)

 
ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

Three Months Ended Six Months Ended
March 31, March 31,
2011 2010 2011 2010
----------- ----------- ----------- -----------
Sales:
Net new sales income $ 6,417,153 $ 7,792,774 $12,942,166 $14,362,687
Net refurbished sales
income 1,299,781 2,851,964 2,701,282 5,120,767
Net service income 1,179,771 1,410,783 2,482,703 2,791,288
----------- ----------- ----------- -----------
Total net sales 8,896,705 12,055,521 18,126,151 22,274,742
Cost of sales 6,211,995 8,435,725 12,561,876 15,324,606
----------- ----------- ----------- -----------
Gross profit 2,684,710 3,619,796 5,564,275 6,950,136
Operating, selling, general
and administrative
expenses 1,545,141 1,675,312 3,043,647 3,406,079
----------- ----------- ----------- -----------
Income from operations 1,139,569 1,944,484 2,520,628 3,544,057
Interest expense 174,863 200,639 360,287 412,573
----------- ----------- ----------- -----------
Income before provision for
income taxes 964,706 1,743,845 2,160,341 3,131,484
Provision for income taxes 366,000 662,000 821,000 1,190,000
----------- ----------- ----------- -----------
Net income attributable to
common shareholders 598,706 1,081,845 1,339,341 1,941,484

Other comprehensive income:
Unrealized gain (loss) on
interest rate swap, net
of taxes 83,622 (46,318) 230,791 45,662
----------- ----------- ----------- -----------

Comprehensive income $ 682,328 $ 1,035,527 $ 1,570,132 $ 1,987,146
=========== =========== =========== ===========

Earnings per share:
Basic $ 0.06 $ 0.11 $ 0.13 $ 0.19
Diluted $ 0.06 $ 0.11 $ 0.13 $ 0.19
Shares used in per share
calculation:
Basic 10,154,355 10,125,870 10,149,163 10,132,658
Diluted 10,164,046 10,129,100 10,160,414 10,135,888


 
ADDVANTAGE TECHNOLOGIES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

March 31, September 30,
2011 2010
(unaudited) (audited)
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 10,243,259 $ 8,739,151
Accounts receivable, net of allowance of
$300,000 3,225,444 4,905,733
Income tax refund receivable 60,327 203,405
Inventories, net of allowance for excess and
obsolete inventory of $2,717,000 and
$2,545,000, respectively 27,035,115 27,410,722
Prepaid expenses 166,642 92,567
Deferred income taxes 1,471,000 1,423,000
------------- -------------
Total current assets 42,201,787 42,774,578

Net property and equipment 7,021,318 7,224,256

Other assets:
Deferred income taxes 521,000 678,000
Goodwill 1,560,183 1,560,183
Other assets 11,236 23,236
------------- -------------
Total other assets 2,092,419 2,261,419
------------- -------------

Total assets $ 51,315,524 $ 52,260,253
============= =============

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,933,391 $ 2,751,498
Accrued expenses 840,275 1,340,414
Notes payable - current portion 1,814,008 1,814,008
------------- -------------
Total current liabilities 4,587,674 5,905,920

Notes payable 11,151,124 12,058,128
Other liabilities 880,892 1,252,683

Shareholders' equity:
Common stock, $.01 par value; 30,000,000
shares authorized; 10,394,589 and
10,367,934 shares issued, respectively; and
10,170,625 and 10,143,970 shares
outstanding, respectively 103,946 103,679
Paid in capital (5,989,073) (6,070,986)
Retained earnings 41,533,132 40,193,791
Accumulated other comprehensive income
(loss):
Unrealized loss on interest rate swap, net
of tax (545,892) (776,683)
------------- -------------
35,102,113 33,449,801

Less: Treasury stock, 223,964 shares, at
cost (406,279) (406,279)
------------- -------------
Total shareholders' equity 34,695,834 33,043,522
------------- -------------

Total liabilities and shareholders' equity $ 51,315,524 $ 52,260,253
============= =============
Contact:


For further information
Company Contact:
Ken Chymiak
(918) 251-9121
Scott Francis
(918) 251-9121
KCSA Strategic Communications
Garth Russell
(212) 896-1250
grussell@kcsa.com
ADDvantage Technologies Group, Inc.
1221 E. Houston
Broken Arrow, Oklahoma 74012
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